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How to Teach your Children About Money

Teaching our children about money is not something we should leave up to the schools. Although some financial content is covered in classes, many children leave school with a lack of understanding about mortgages, credit ratings and personal debt.

One major problem with this is that by not understanding debt, younger generations quickly accumulate credit which they spend recklessly, and then cannot repay. This would leave many people with a difficult financial future, unable to gain a mortgage and finding it difficult to live day-to-day in a financially viable way.

So, where do we parents start? Make sure that what you are discussing is age-appropriate. This great site talks through some topics to consider at each age group. Turning your day-to-day life for a learning experience can be a fantastic way to deal with your children’s financial shortcomings. Go through some of the best ways to open conversation about money with your children in a subtle approach.

Age-wise approach

Ages 2 and 3

Interestingly, a child of this age innocently values money according to its size and weight. For instance, ask your child to choose between a penny, dime, and a nickel, what does he choose?

Almost every time, he would choose a nickel because of its size. It is because, at this age, young children do not understand the value of money. Indeed, you can start conversing with the names of the different coins.

  • How about playing a coin identification game! Well, that seems interesting. Knowing and tracking the colors of the coins with their names can trigger your child’s curiosity to just another level. Moreover, it is advised to play all these games under supervision since children tend to swallow coins.
  • You can also create a virtual shop in your living room if your child loves to play store. In this way, you can make your child understand the value of money in a playful manner. By exchanging goods for cash in an imaginative store game, you can introduce the essence of marketing and commerce effectively.

Ages 4 and 5

  • How about asking your pre-schooler to list all the needed items before heading to a supermarket? That can be a great idea to make your children learn the value of money.
  • You can also ask them to help you with clipping coupons. It is essential to make them feel a part of the game, so involve them while you select various products in the supermarket. Handing the coupons to your child and encouraging them to roll an eye over the products can be a great step.
  • At home, you can also participate with your kid to play games like that of an imaginary restaurant. They can help you to make your child align with the money matters and enhance skills.
  • In this way, you can inculcate good habits of eating habits as well as make them consider paying bills after meals. Indeed, once your child understands the concept, your child will be excited about the finance proceedings wilfully.

Age 6 to 8

  • You can make a trip to the back as an event for your child. Helping your child to open a simple savings account and encouraging them to go for regular deposits can effectively simplify your way.
  • As the balance of the account grows, discuss the importance of interest rates and various possibilities of financial income. You can also inculcate a habit of coin-collecting for your child. In this way, your child likely gets the habit of depositing money regularly and understand the value of savings in the long run. For example, from the age of 8, you could start to discuss how you earn money and what a salary is. Then you could discuss how this goes to contribute to monthly expenses like the food bill or the electricity bill. The more you familiarize them with the terminologies of finances, the more accessible it will be to them.

Here are just a few items to consider chatting with to your older children in an informative, but casual and honest way:


Wonga South Africa, a ‘same day’ cash loan provider, recently released this blog post about why you need to understand debt. You need to discuss with your children about good and bad debt, according to their blog. It’s OK to get help with finances by applying for credit when you need it – but make sure that the debt you are accumulating is considered to be ‘good.’ So for instance, obtaining a car through credit might be considered good debt as it allows you to get to work which earns you money. Spending out on a holiday might be considered bad debt as this is not really something you need. Wonga suggests you ask 3 questions – do you need it? Can you afford it? And, how much will it cost you overall?


Many people fail to save effectively and so it is important to teach your kids about saving from an early age. Perhaps you could suggest saving ¼ of their pocket money each month to start with. Many banks allow you to set up a children’s savings account and this can also help to encourage them to hold back money early on.


of course you’ll want your children to earn well in their future, and so it is important to encourage them to do the best they can and earn a regular income. Education will help them achieve the job that they want – so ensure they know the importance of heading off to school now and studying hard, as everything impacts their future. It can be difficult for children to see the bigger picture. They are, after all, just children and need to enjoy their innocence. However, there is no problem in explaining about the importance of school and getting a job periodically to remind them of this.

  • Give them the responsibility of a bank account

It would help if you created a sense of trust among your older children. Trusting teenagers is reciprocating. In return, your children would never fear to share any instance that bothers them on financial grounds. You should be able to set them with a simple bank account if they have frequently been involved in your money proceedings. Starting with an elemental bank account with minimum balance can prepare them to handle the heftier budget as they get old.

  • Involve them for paying in the real world

As your teen steps in for college, he must be ongoing over some summer jobs to enhance his profile. If not, get them to work over the interest domains that count them responsible in the real world. Taking a portion of your children’s savings and tossing it for the college fees can be significant. In that way, your children would feel like they have skin in the game as they are contributing a portion to their education.

  • Forgot to tell your children about the risk involved in credit cards?

As soon as children brim with materialistic fantasies, they would be hounded by the credit card offers. If you have not conveyed them about the dangerous prospects of having a debt, they may be the next credit-card victim. Make your children understand the proper usage of credit cards with real-life circumstances.

  • Help them figure out the possibilities of adding a new source of income

Teaching your children about money can be placed synonymous with teaching them to make money virtually. You can route their hobbies to a professional career. Starting with their free time and making them utilize productive aspects can effectively introduce them to the real world. Help them find a job or support them in their entrepreneurship ideas. With the technological advancements for funds and loans in today’s world, your child can turn any functional idea into a profitable business.

Let your children understand the fundamental aspects of finance and its importance in the most simplified way.

Peter Christopher

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